S&P cuts Signa

S&P said it downgraded its ratings for Signa Development Selection AG and its senior unsecured debt to B- from B. The agency also revised the recovery rating on the senior unsecured debt to 4 from 3 and indicates average (30%-50%; rounded estimate: 40%) recovery in default. A 3 recovery rating indicates meaningful recovery of 50%-70%.

“The downgrade reflects our expectation that credit metrics will remain weaker in the next 12 months, as we expect demand for commercial real estate assets to remain subdued amid further interest rate increases and tighter financing conditions for buyers, as well as uncertainty on real estate valuations. SDS' project sales and project deliveries were affected significantly in the past 12 months by the sharp increase in interest rates, a softer transaction market, and uncertainties around future property valuations,” the agency said in a press release.

S&P said it expects SDS’ S&P Global Ratings-adjusted interest coverage will stay around 1.2x-1.4x for 2023, appropriate for a B- rating, and a ratio of gross debt to EBITDA of 15x-17x in 2023.

The outlook is negative.

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